China holds the upper hand in trade standoff with US: Shaun Rein

A new war of words is unfolding between the United States and China as fresh tariffs and sanctions ignite concerns of a full-blown trade confrontation. In an exclusive conversation with ET Now, Shaun Rein, Managing Director of the China Market Research Group, offered a candid and critical view of U.S. policy under Donald Trump, arguing that China is better positioned to withstand economic hostilities.

When asked whether either country can afford a trade war, Rein stated bluntly, “Well, it is very clear that the United States cannot afford a trade war. China should not and does not want a trade war but can afford it because we are running up to the Christmas time period.”

He explained that the domestic political landscape in the U.S. could backfire against Trump’s aggressive tariff strategy. “The evangelical Christians who form up Trump's support base are going to be very angry if you have got 100% additional tariffs on top of the already 30% tariffs coming into the United States from Chinese-made goods,” Rein said, adding that the resulting pressure would force Trump to “bow and rescind the tariffs.”

Rein didn’t mince words when criticizing Trump’s inconsistency. “He said we are going to have 100% tariffs and then he posted on True Social, it is okay, everything is going to be alright with the Chinese. I love tacos. It takes longer to cook tacos than it does for Trump to keep any type of economic tariffs and sanctions on China because he is weak,” Rein quipped.

He went on to contrast Trump’s stance toward India and China: “Trump slapped 50% tariffs on India six weeks ago. They are still there. He is a bully. He is not going to back down because he has all the leverage on India. But when it comes to China, China has all the leverage and that is why Trump is a taco when it comes to China.”

China’s Calibrated Response

When asked if Beijing was adopting a “wait and watch” approach, Rein emphasized China’s calculated strategy. “It is very calibrated, that is a great question. What else can the United States do? It has already put all of the export controls on technology like chips from Nvidia,” he said.

According to Rein, China has significantly reduced its reliance on the U.S. “Over the last nine years, China has derisked from the United States. They no longer rely on the US for anything except for semiconductors and ethane,” he noted. He pointed to major investments in domestic semiconductor innovation and alternative trade partnerships, mentioning, “They are buying soybeans from Brazil and even from Argentina, which Scott Bessent just bailed out with a $20 billion package.”

Rein accused the U.S. of breaking earlier understandings reached during Madrid meetings between Chinese Vice Premier He Lifeng and Treasury Secretary Scott Bessent. “The Americans lied again,” he said, referring to Washington’s continued sanctions and new port fees targeting Chinese-made ships. “The Chinese feel that Scott Bessent, Howard Lutnick, and Trump just cannot be trusted. So, they had to threaten in a measured way to put on export controls of rare earth.”

The Treasury Card and the Future of the Dollar

Rein warned that Beijing still holds a powerful financial weapon—the U.S. Treasury market. “Since the first Trump regime, starting around 2017, 2018, China has actually divested. They have sold off half of their US dollar holdings and they have moved into other currencies or even gold,” he revealed.

He connected China’s shift to broader global concerns about U.S. financial policy. “That is why gold has crossed $4,000 US a gram because everybody in China says we cannot hold on to the US dollar. We do not trust the US, especially after Biden weaponized Swift and the US dollar against Russia,” Rein argued.

He added that China is pushing for greater use of the RMB in trade: “They want to get rid of the US dollar as the major trading currency. You just cannot trust it right now.”

The uncertainty, Rein said, has also driven investors toward alternative assets. “That is why investors are going in not just into gold, but also into bitcoin and other cryptocurrencies because you just cannot trust the United States right now,” he remarked.

Rein closed with a stinging critique of Trump’s leadership style: “Trump has said he is a narcissist. He is like an infant. He wants everything to be about him. He does not even care about the United States right now. It is how he personally can gain more power and how his family can get more riches. Barron Trump might be a director of TikTok. I mean, that is crazy. A 19-year-old because they are trying to steal TikTok from the Chinese.”

As tensions between the world’s two largest economies deepen, Rein’s remarks underscore how Beijing’s long-term strategy of diversification and de-dollarization could shift the global balance of economic power. For now, both nations appear locked in a high-stakes standoff—one that could reshape global trade for years to come.